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If history were any guide, folks would be climbing over themselves to chase equities' record-setting performance. After all, the Standard & Poor's 500 has provided a robust total return of 16.3% in the past year, more than doubling the very respectable 8% return of a long Treasury bond. But the U.S.' leading financial advisors find themselves having to coax investors to commit further to a rallying stock market.

"Clients got stung in the tech crash of 2002 and stung again in 2008, so they're naturally concerned about market declines," says Richard Saperstein, of High-Tower's Treasury Partners in New York. "They're reluctant holders of stocks right now."

But that is exactly how they should feel, given the strong run in several asset classes. This is one of those times when the overused phrase "cautiously optimistic" is actually the right approach, says Steve Lockshin, chairman of Convergent Wealth Advisors in Los Angeles.

Barron's Top 100 advisors, (click here to see the complete list), generally believe that fixed-income gains have mostly run their course, in light of both the length -- nearly six years -- and the depth -- from 5.4% on the 30-year Treasury to 2.99% -- of the historic decline in interest rates. "There's as much risk in the fixed-income markets as in the equity markets," says Greg Vaughan, of Morgan Stanley Private Wealth Management in Menlo Park, Calif., whose reign as our No. 1 advisor extends for a third straight year.

Stocks, in the advisors' opinion, can still gain because they're coming off 10 years of flat returns, and their fundamental valuation, based on an S&P 500 price/earnings multiple of 14.1, looks reasonable. In some ways, they are less risky than the traditional haven of bonds. Look at
Coca-ColaKO 0.09874105159219945%Coca-Cola Co.U.S.: NYSEUSD40.55
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15424427AFTER HOURSUSD40.55
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Volume (Delayed 15m)
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1148325
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25.030864197530864Market Cap
176967650743.801
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3.255240443896424% Rev. per Employee
355503More quote details and news »KOinYour ValueYour ChangeShort position
(ticker: KO), Saperstein says. The company's 10-year bonds are paying 2.2% -- but the dividend yield alone on its stock is 2.74%.

A year ago, a risk-averse client might have as much as 50% of his assets invested in fixed income, says Vaughan. Today, that's as low as 20%, with 15% or 20% now directed to alternative investments and the remainder -- as much as 65% -- in U.S. and non-U.S. equities, he says. (For the latest on what leading advisors are telling their clients, see our profiles story, "Close-Ups of Five of Barron's Top Advisors.")

Rising stock and bond markets helped make 2012 a good one for our Top 100 advisors. Their average assets rose by 20%, to $8.3 billion, during the calendar year, nearly four percentage points more than the S&P 500's gain and more than twice bonds' return. Their portfolios represent a greater concentration of wealth than last year, since this year's Top 100 work for fewer households. The average client's net worth has risen to $218 million from $178 million, a 22% gain. Saperstein says good investment results during the market crisis of 2008 have continued to prompt referrals for him. He jumped in the rankings to No. 5 from No. 19.

Barron's 2013 ranking -- based on assets under management, revenue generated for the advisors' firms, and the quality of advisors' practices -- introduces 18 pros who didn't appear last year. And not only did Saperstein rise, but Ron Carson of Carson Wealth Management in Omaha, Neb., gained 11 spots to No. 7, and Morgan Stanley's Shelley Bergman moved up to No. 8 from No. 14 last year. Merrill Lynch's Richard Jones and Reza Zafari each leapfrogged more than 20 positions, with Jones landing at No. 71 and Zafari at No. 75.

We don't break out the performance of individual advisors because they are serving clients with varied goals, making a direct comparison difficult. But as a rule, the top advisors have strong investment records; otherwise, they wouldn't get the sorts of recommendations Saperstein refers to and wouldn't be able to grow their businesses.

"The question is how the market reacts when the Fed starts pulling away the punch bowl." -- Richard Saperstein
Matthew Furman for Barron's

This ranking differs from the Top 1000 Advisors listing we ran in February; in that one we singled out the leading advisors in each of the 50 states. This ranking disregards locations. Later this year, as in the past, we'll publish Top Women Advisors (in June) and Top Independent Advisors (in August).

ASIDE FROM STRONG MARKETS, financial advisors enjoyed some other tail winds in the past year. Fueled in part by an improved economy, mergers-and-acquisitions activity has picked up in places like Silicon Valley, producing a new crop of wealthy entrepreneurs in need of financial advice.

"M&A activity has been pretty robust, and that drove clients to us," says Vaughan, who's located in the heart of the high-tech capital.

And the complications of the fiscal cliff sent clients to multifaceted advisors for tax help and other forms of financial planning. Lockshin says he recently met with a prospective client who had just come into $100 million. He wanted to talk about how much cash he'd need to meet his lifestyle objectives and his long-term hopes for the balance of his assets.

"We didn't even discuss his investment portfolio," says Lockshin, who eased into the No. 2 slot this year from No. 6.

IF THEY HAD, the conversation might have touched on the proper balance between fixed-income and carefully selected stocks. While investors can't be blamed for flashbacks to the past two stock-market crashes, today's investment climate is significantly different, says Saperstein.

Central banks virtually everywhere are easing monetary conditions, and the U.S. economy is growing, if modestly, note the advisors. Even at record index highs, stock valuations are reasonable given corporate earnings. Dividend yields are higher and price/book values are lower than in 2000 and 2007, notes Saperstein.

"And don't forget that in 2007, 20% of the market was in financials, while today there's a much more even distribution," he says. "There are just a large number of factors that support this market."

Saperstein goes so far as to say that, for increasing capital and maintaining portfolio returns, there are few sound alternatives to high-grade stocks. He favors large-cap consumer staples along with some small- and mid-cap stocks with strong domestic sales.

Lockshin continues to like emerging-market stocks, even though they can suffer short-term volatility. Emerging countries' economies are growing; they don't have the imbalances of debt to gross domestic product bedeviling many developed countries, and their middle classes are becoming established.

"We've been fans for a few years," he says. "They haven't had that crazy rally yet."

The advisors clearly don't have the same enthusiasm about bonds. Vaughan and his team are selling riskier fixed-income assets such as high-yield bonds and preparing for rising interest rates by, for instance, buying floating-rate debt.

"The question is how the market reacts when the Fed starts pulling away the punch bowl." -- Steve Lockshin
Thomas Michael Alleman for Barron's

Lockshin's team is shortening the durations of its bonds and focusing on high quality in clients' portfolios. They've reduced holdings of emerging countries' debt because these markets tend to exaggerate the moves of some of the major ones. "If Europe gets a cold, they get a flu," he says.

Alternative investments have become a regular part of the portfolios of the wealthy, of course (For more on real-estate plays, see "What's the Best Path To Real-Estate Profits?"). As with any investment, buying at a discount is preferable, and that's what Vaughan is able to do by plying secondary markets in hedge funds and private equity. "Through Morgan Stanley, [we] have the ability to gain exposure to many of the best-performing hedge funds and private equity funds," he says. By using the secondary markets, he can often get a deal.

Good advisors always have an eye out for twists and turns in the road ahead, and these days they are watching the Federal Reserve. Its accommodative policies have helped the economy and the stock and bond markets, but they won't last forever. Saperstein believes the Fed may change course in 2014, but there's no way to be sure.

"We're in a very unusual environment because we have a Fed that's extremely active in the markets," he says. "The big question is how the market will react when the Fed starts pulling away the punch bowl." The answer will help determine next year's Top 100-financial advisors.